Great Products Need Little Advertising: New Product Development

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Harlan Beverly is pursuing a PhD in Business with a focus on Entrepreneurship and Marketing. In this presentation, Harlan outlines a study he plans to undertake to show that Product Conception Quality is a moderator of Advertising Expenditure to revenue success... specifically in the video game market.

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  • More than 50% of new Products Fail! 1 These products fall into the Chasm of failed products… They simply fail to catch on with the Market.
  • Effects of  word -of- mouth  versus traditional marketing: findings from an Internet  social  networking site http://okstate.summon.serialssolutions.com/link/0/eLvHCXMwVZ3BCsIwDIaDKHgeaK--QMeytd16Hg4PgiAKemxq6k0QfX9M5zx4CjmEHBq-EGj-AGzyerIxhqiNlqP1gTpP2Da2CswOw5-gz_fb4QivoYAZP1ZwHranfqenYwD6jhKrXdP6JGjlxmTRNl-HZJktI-cELG2WsjI6ukgdGRsdoo_kgr-lFGNNuIa5DNSsYJHkYcUKbJWQUcHy4vv99XCc3OLnlq9x8al8vpWwfawLjWX1AR-bNgo
  • Great Products Need Little Advertising: New Product Development

    1. 1. Great Products Need Little Advertising By: Harlan T. Beverly Oklahoma State University June 2013 * IGNITE FORMAT PRESENTATION
    2. 2. 50% of Products Fall into the Chasm of Failures.1 1 Cooper, Robert G. “New Products: The Factors That Drive Success.” International Marketing Review 11, no. 1 (1994): 60–76.
    3. 3. 2 Moore, Geoffrey A. Crossing the chasm: Marketing and selling disruptive products to mainstream customers. Harper Business, 2002. Moore Says: Get Passionate Early Adopters &Moore Says: Get Passionate Early Adopters & Leverage Into the Early Majority.Leverage Into the Early Majority.
    4. 4. Godin Says, Build a REMARKABLE PRODUCT3 3 Godin, Seth. Purple cow: Transform your business by being remarkable. Portfolio, 2003
    5. 5. How Many People Have Heard Statements Like: “We just didn’t market the product well” or “It’s Marketing’s Fault, They Never Got the Word Out.”
    6. 6. Research Questions • Can Advertising a Poorly Conceived Product Lead to Success? • Can Well Conceived Products Succeed with less or even no Advertising?
    7. 7. Normal Assumption RevenueRevenue SuccessSuccess AdvertisingAdvertising ExpenditureExpenditure
    8. 8. Research Question RevenueRevenue SuccessSuccess AdvertisingAdvertising ExpenditureExpenditure ProductProduct ConceptionConception QualityQuality (Mo)(Mo)
    9. 9. Prior Research on Product Conception Quality • Existing Research has shown evidence that Product Conception Quality is a key success factor of NPD: – Product Superiority5 5 Cooper, Robert G., and Elko J. Kleinschmidt. “Screening New Products for Potential Winners.” Long Range Planning 26, no. 6 (1993): 74–81. 6 Murphy, Steven A., and Vinod Kumar. “The Front End of New Product Development: a Canadian Survey.” R&D Management 27, no. 1 (2002): 5–15.
    10. 10. Prior Research on Product Conception Quality • Existing Research has shown evidence that Product Conception Quality is a key success factor of NPD: – Product Superiority5 – Upfront Marketing Homework Research5 5 Cooper, Robert G., and Elko J. Kleinschmidt. “Screening New Products for Potential Winners.” Long Range Planning 26, no. 6 (1993): 74–81. 6 Murphy, Steven A., and Vinod Kumar. “The Front End of New Product Development: a Canadian Survey.” R&D Management 27, no. 1 (2002): 5–15.
    11. 11. Prior Research on Product Conception Quality • Existing Research has shown evidence that Product Conception Quality is a key success factor of NPD: – Product Superiority5 – Upfront Marketing Homework Research5 – Clarified Project Requirements6 5 Cooper, Robert G., and Elko J. Kleinschmidt. “Screening New Products for Potential Winners.” Long Range Planning 26, no. 6 (1993): 74–81. 6 Murphy, Steven A., and Vinod Kumar. “The Front End of New Product Development: a Canadian Survey.” R&D Management 27, no. 1 (2002): 5–15.
    12. 12. Prior Research on Product Conception Quality • Existing Research has shown evidence that Product Conception Quality is a key success factor of NPD: – Product Superiority5 – Upfront Marketing Homework Research5 – Clarified Project Requirements6 – Clearly meeting specific needs of the Target Market6 5 Cooper, Robert G., and Elko J. Kleinschmidt. “Screening New Products for Potential Winners.” Long Range Planning 26, no. 6 (1993): 74–81. 6 Murphy, Steven A., and Vinod Kumar. “The Front End of New Product Development: a Canadian Survey.” R&D Management 27, no. 1 (2002): 5–15.
    13. 13. Hypothesis RevenueRevenue SuccessSuccess AdvertisingAdvertising ExpenditureExpenditure ProductProduct ConceptionConception QualityQuality Lower Quality Conception will Decrease Advertising Effectiveness Higher Quality Conception will Increase Advertising Effectiveness
    14. 14. Why Might Conception Quality Effect Advertising Effectiveness •Word of mouth marketing is one of the most powerful methods of advertising.4 – It’s free – It includes a built-in reference/recommendation – It can be viral (go from person to person) •According to Moore and Godin, this word-of-mouth and referencing action is what makes products succeed. 4 Krishnan, Viswanathan, and Karl T. Ulrich. “Product Development Decisions: A Review of the Literature.” Management Science 47, no. 1 (2001): 1–21
    15. 15. Modern Technology • Modern Technology Has EMPOWERED customers such that: – They can easily research the best products to satisfy their needs. – They can easily see reviews and quality information. – They can quickly get the advice and recommendation from friends. • Studies are Showing that Social Networks have Increased the Power of “Word-of-Mouth”7 Trusov, Michael; Bucklin, Randolph E; Pauwels, KoenJournal of Marketing, ISSN 0022-2429, 09/2009, Volume 73, Issue 5, p. 90
    16. 16. Does Advertising Even Matter? • One goal of this study is to examine if Advertising even matters at all! – Or how little is needed to “get the Word of Mouth rolling”
    17. 17. New Metric: Product Conception Quality Likert Scale Survey Questions: •The Product Was Superior in it’s Category at Launch. •The Product Was Targeted to a Clearly Defined Target Market. •Marketing Studies Were Performed and Used During The Product Definition Stage. •Team Members Felt the Product Was Clearly Defined Prior to Development. •The Team Understood the Needs and Desires of the Target Market Well. •The Product was Designed to Fulfill the Needs and Desires of the Target Market.
    18. 18. Research Design • Survey & Historical Data • 10 Game Companies, 10 Video Games – Historical Independent: Advertising Expenditure – New Metric Independent: Product Conception Quality – Dependent: Historical Revenue Results • ANOVA analysis with interaction effects
    19. 19. Risks • Is the sample size significant? • Can we even find 10 willing participants? • Is Revenue the right Dependent Variable? – Hoping by focusing on games, the price effect on revenue will be mitigated somewhat. • Is the survey metric for Product Conception Quality any good? • Are there other more significant effects at play?
    20. 20. Thank You!

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